The Debt Management Office, DMO, Director-General, Abraham Nwankwo, on Thursday, December 10, said there is no cause for alarm over Nigeria’s $64b debt profile.
Nwankwo said the country’s $64b debt profile is 84 per cent internal and 16 per cent external.
According to him, the country can afford to borrow $25 billion annually for the next 10 years.
Nwankwo, who spoke when he appeared before Senate Committee on Local and Foreign Debts, said: “We have been sensitising Nigerians that we need to do better because our tax- Gross Domestic Product (GDP) ratio is very low compared to countries in our debt role.
“Their entire GDP ratio is about 18 per cent whereas for Nigeria, it is about 6 per cent, which means that we are not being effective in collecting taxes to reflect the size of our economy.
“This has implications for debt service. Certainly there is the need to be careful even though there is space we need to relate debt service to revenue. The solution is that we have a big gap to fill because when we move upward from the 6 per cent tax-GDP ratio, we will have a lot of money to solve our problems including servicing our debts.
“For now our debt servicing-GDP ratio is still very low, but we are optimistic because there is room to collect tax from the existing level of economic activities.”
Nwankwo also justified the loans taken by the country, saying repayment period for most of the loans is spread for 40 years.
The Senate committee expressed concern about the use of borrowed funds at the meeting. It said the Federal Government should take any form of misapplication of borrowed funds seriously.
A member of the committee, Senator Philip Gyunka (Nasarawa North), demanded to know how the loans obtained by the country are applied and whether they were applied for the purposes they were sourced.
Gyunka noted that he believed that if the facilities were applied for the purposes they were obtained, the country would have been better.
He noted that instead of applying the loan judiciously, some of them were misapplied without punishment being meted to those involved.
The lawmaker said the present generation of Nigerians must not allow a situation where the upcoming Nigerians would accuse the older generation of mortgaging their future.
Gyunka also frowned at the situation where the solid mineral sector of the country is left untapped.
According to him, the government should take the issue of diversification seriously in the interest of the development of the country, insisting that the debt profile of the country is low.